FDIC take enforcement action against two TARP banks

The Federal Deposit Insurance Corp. said Friday it had issued enforcement actions against 29 banks it viewed as operating in an "unsafe and unsound'' manner, including two institutions that received taxpayer aid through the Troubled Asset Relief Program.

 

The FDIC said Premier Bank, of Wilmette, Ill., and Bloomfield State Bank, of Bloomfield, Ind., agreed to consent orders that called for them to strengthen management, increase board oversight, boost capital levels and take more aggressive action on problem loans, among other things.

 

Premier Bank's parent company, Premier Bancorp Inc., got $6.78 million in TARP money in May 2009, in return for preferred stock it issued to the Treasury Department.  On Aug. 13 of this year, it essentially refinanced that obligation by switching to another TARP program, the Community Development Capital Initiative.

 

The FDIC and Illinois banking regulators issued their joint order against Premier Bank three weeks later, on Sept. 3.

 

Bloomfield State Bank's parent company, Universal Bancorp Inc., got $9.9 million in TARP money in May 2009. Its consent order, issued Sept. 17, gave it 30 days to hire an outside consultant to develop a written analysis and assessment of the bank's management needs.

 

Regulators gave the bank  60 days to find ways to reduce delinquency levels and to develop a liquidity plan, and gave it until the end of the year to lift capital levels to a specified level.

 

The FDIC issued "prompt corrective action" notices last month to five banks - Charter Oak Bank, in Napa, Calif.;  First Vietnamese American Bank, in Westminster, Calif.;  FirsTier Bank, in Louisville, Ky.;  Valley Community Bank, in St. Charles, Ill., and Nevada Commerce Bank, in Las Vegas.

 

Those notices rank among the most serious that a bank or bank holding company can receive. Although they are not necessarily an indicator that a recipient is on the verge of failure, most of the banks that have been shut down by regulators in the past few years have received such notices.

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